Annual reports at a third of FTSE 100 firms are giving investors an inaccurate overview by withholding relevant information, a study out today has found.
The research by the Valuing Your Talent partnership – which consists of the Chartered Institute of Management Accountants (CIMA), the Chartered Institute of Personnel and Development (CIPD) and the Chartered Management Institute (CMI) – discovered that many company reports skipped over important staff information, such as data breaches, skills challenges and employee retention.
The study discovered that the picture painted by company reports could be quite different to that portrayed in the media. For example, the researchers identified four cases where employees had been reported to have been involved with insider trading, but the annual reports for the applicable companies did not pick up on these incidences.
The researchers, however, did highlight that the banking sector had increased the level of transparency in its reporting after the financial crisis and the PPI mis-selling scandal.
"The number one driver of productivity and business growth is the quality of management and leadership, because that's critical to how far organisations get the best from their people," said Ann Francke, chief executive of the CMI. "But if managers don’t have sight of good people measures, they have a huge blind spot about performance and can’t make the best decisions about their business."
Charles Tilley, chief executive of CIMA, added: "We have to recognise people as the key to creating and preserving value. Failing to do so opens up major risks – and means that huge opportunities will be missed – because business leaders, investors and other stakeholders won’t have the data they need to make the right decisions."
Peter Cheese, chief executive of the CIPD, remarked: "With many more questions being raised about corporate cultures, diversity, engagement and wellbeing, as well as the changing nature of the workforce and how these impact productivity and risk, we need greater transparency and consistency of human capital reporting."
The CIMA, the CIPD and the CMI have been collaborating to develop a set of terms and definitions for people-related measures, which will allow companies to report on such issues in a consistent manner.